A luxury UK-based fashion website is gearing up for a stock exchange listing that is expected to value the company at more than £4bn – or close to the current market valuation put on the whole of Marks & Spencer.
Farfetch, launched in 2008, enables nearly 900 boutiques and luxury brands to sell their designer fashions to a customer base of 2 million well-heeled shoppers across 190 countries.
On Monday it will unveil a deal with upmarket department store Harvey Nichols in the latest of a series of alliances that already include Burberry and Chanel.
Farfetch is one of a small number of homegrown unicorn tech companies that are valued north of $1bn. With sales growing at more than 50% a year, Farfetch has become a magnet for wealthy millennials happy to splurge £500 in an online shopping spree.
At the weekend the Financial Times reported that Farfetch had engaged bankers from JPMorgan and Goldman Sachs to work on a US listing that would seek to value the company at more than £4bn.
The valuation puts Farfetch in the elite league of UK fashion companies. Burberry currently has a stock market value of £7bn, while Asos, aimed at fashion-conscious millennnials, is valued at around £6.3bn.
Marks & Spencer’s shares have dived over the past year from 395p to a year-low of 277p in trading last week, valuing the high-street behemoth at £4.5bn.
FarFetch was founded by Portuguese fashion entrepreneur José Neves in 2008 with the idea of creating a single online marketplace for luxury boutiques and brands. Over the past decade it has grown in stature, attracting high-profile investors such as: Temasek, Singapore’s investment company; Vogue publisher Condé Nast International; and the Chinese e-commerce behemoth JD.com.
“We want to become the global platform for luxury,” said Neves. “Department stores are very good at brand awareness and contact with their local customers … Farfetch offers access to customers in China, Japan and Korea as well as emerging markets like Russian and Latin America.”
Neves declined to comment on the company’s financial plans.
The luxury market grew by 5% to an estimated €1.2 trn (£1.07trn) in 2017 according to consultancy firm Bain which said the majority of that growth was down to spending by shoppers under 40. Online sales jumped 24% to account for 9% of luxury retail which explains why high-end brands such as Harvey Nichols are so eager to work with Farfetch, which boasts that the average age of its shoppers is 36 years old.
Harvey Nichols, which in the 90s enjoyed cult status thanks to its lampooning in hit TV comedy Absolutely Fabulous, is owned by the Hong Kong-based luxury goods billionaire Sir Dixon Poon. In recent years the brand has fallen off the fashion radar, with sales stalling at its 15 stores dotted around the world. Poon said the deal demonstrated its “commitment to embracing cutting-edge digital technology, to create a model of the future”.
Unlike designer fashion websites such as Net-a-Porter and Matches, Farfetch does not buy any stock or run its own own logistics operation. Instead it relies on third parties to move £1,000 trenchcoats and handbags around the world, taking a 25%-30% cut of the sales it generates. Its most recent accounts recorded a £35.4m loss on sales of £151.3m in 2016.
Farfetch is co-chaired by online fashion supremo Dame Natalie Massenet who founded Net-a-Porter. “Bringing such an iconic and much-loved department store to Farfetch is a strategic milestone for both companies,” said Massenet. “Farfetch is proving it is truly the technology platform for the whole luxury fashion industry.”
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